The EDHEC Risk and Asset Management Research Centre released a new paper about the initial lessons to be drawn from the subprime lending crisis this summer.
This is one of the topics to be discussed at the EDHEC Alternative Investment Days on 20 to 21 Nov. at The Brewery in London with SEC Commissioner Paul Atkins and Hector Sants, chief executive of the FSA.
The study, entitled “Three Early Lessons from the Subprime Lending Crisis: a French Answer to President Sarkozy,” by Noel Amenc, professor of finance and director of the EDHEC Risk and Asset Management Research Centre, argues that, despite what regulators and political leaders, notably President Sarkozy and Chancellor Merkel, have said, hedge funds are clearly not to blame for the subprime crisis and the contagion that has spread to all segments of the credit market.
The crisis is ultimately more a crisis of confidence in financial information and the market’s capacity to evaluate the solvency of credit institutions, EDHEC says. By placing the blame on the wrong parties, European leaders and regulators may very well fail to take on board the true dimension of the subprime crisis, which is above all a regulatory crisis.
The full version of the study can be accessed from www.edhec-risk.com.